The World Comes to the Iron Range

“Arcelor will take a look at how the [Algeria] steel plant performs with those pellets, as well as the cost of getting those pellets there, and then compare that with getting the lump ore from Brazil or wherever else,” says Tim Tomsich, Hibbing Taconite’s manager of financial control. That will determine whether the company continues to ship its excess pellets to Algeria or another plant, or sells them on the open market. ArcelorMittal now claims a nearly 19 percent share of Minnesota’s annual taconite production.

Mittal isn’t the only Indian presence on the Iron Range. It may not even be the most ambitious.

An American First

In October, India’s Essar Steel bought St. Paul–headquartered Minnesota Steel, which was developing an integrated mine-to-steel operation on the Range. Howard Hilshorst, executive vice president of Minnesota Steel, says the company will break ground on its steel plant sometime this year and is looking at a mid-2010 opening date. The plant will be located near the former Butler Taconite mine site, which closed in 1985.

“We will be opening a new mine pit in addition to mining one of Butler’s taconite pits,” Hilshorst says. The company’s iron ore reserves are estimated at 1.4 billion long tons, making it perhaps the largest remaining deposit in the state, with an estimated life of 100 years. The company plans to mine 13 million tons of ore per year and produce 4.1 million tons of high–iron content pellets.

Instead of shipping its pellets to electric arc furnaces along the Great Lakes, Minnesota Steel will turn them into slab steel on site. (Electric arc furnaces take only pellets with an iron content of 95 to 99 percent. Taconite pellets, which are 65 percent iron, are sent to blast furnaces.) The company will then ship a portion of the slab steel to its plant in Sault Sainte Marie, Ontario, to be converted into finished steel.

“At full capacity, we will have two electric arc furnaces and we are permitted [by the Federal Corps of Engineers, the Minnesota Department of Natural Resources, and the Minnesota Pollution Control Agency] to produce 2.5 million tons of steel a year,” Hilshorst says. When completed, Minnesota Steel will be the first vertically integrated mine-to-steel plant in North America.

Once all of these projects are up and running, assuming the other mines hold annual production fairly steady, Essar, through its ownership in Minnesota Steel, will own a little under 10 percent of the state’s projected annual iron ore production.